How to Build a Better Budget with Budgeting Apps

Dr. Charles Hodges, UWG professor of finance, gives students resources to build a better budget and prepare for unexpected financial challenges.

Before students can create a budget, there are a few things they need to do first.

“The first thing that you should do at all is goal setting,” said Hodges. “This is because you should be dedicating your time and money to achieving goals.”

Once students have their financial goals in mind, they can move on to step two.

“The second thing is you need to figure out where you’re at and what I would suggest is that you use one of these personal budgeting apps,” said Hodges. “I happen to use Mint.com, but there’s a bunch of them out there.”

Some other apps Hodges recommends are Personal Capital, Tiller, Monarch Money, CountAbout, Simplifi, You Need a Budget and PocketSmith. Wells Fargo and Bank of America also have budgeting tools for their members.

“[Mint] will show you what your personal wealth is, it shows me the balance on every credit card and it would show me if I had student loans,” said Hodges. “It estimates the value of my house every week, it estimates the value of my car every week, it can show me when bills are due and the main thing that it does that you would find useful is it shows your transactions and it classifies them.” 

Once students have done this, creating a budget is as simple as pressing a button.

“If you click on ‘add a budget,’ it will analyze your spending for the last three months and it will create a budget based on your spending and then you can modify it over time,” said Hodges. “Then if there’s something that really worries you, you can set up a category that is important to you and you can tell it, ‘I want you to tell me how much I spend on that.’”

For surprises and unexpected rises in costs, flexibility is essential.

“You have to have some sort of built-in flexibility, and for me the built-in flexibility is to have an emergency fund,” said Hodges. “For you, the built-in flexibility is to have a credit card that’s not maxed out. That way, if the price of gas doubles, you can still afford it for a few months because you can put it on your credit card.

“For me, I’m older, I’ve got the income,” continued Hodges. “And at my age, my income is not going to go up. For you, your income is going to go up, so it makes sense for you to be going into debt. For me, it makes sense to be getting out of debt.”

Hodges stresses the importance of students being honest with themselves when it comes to creating a budget.

“If you’ve got a vice, put it in the budget,” said Hodges. “So if you’re drinking to black out every Friday night, don’t pretend you’re going to quit doing that, put it in the dang budget.”

In addition to being honest, Hodges emphasizes the importance of being accountable to others.

“Whatever you’re trying to accomplish, you cannot do it on your own,” said Hodges. “You’ve absolutely got to get other people involved who can help you. Most of your goals will need teams to get it done, and a lot of us are shy about communicating these things. The reality is that we should share our goals with others, even if it’s embarrassing.”